On a qualitave perception basis, respondents when asked to share their opinions on 'most to least impacted sectors', 51 percent said jewellery & watches was most impacted followed by real estate at 30 percent.Varun Jain | ETRetail | April 20, 2017, 15:14 IST

New Delhi: India's luxury sector, which was growing consistently at approximately 20-25 percent per annum for the past several years, witnessed an immediate negative impact of demonetisation with a dip in sales in tune of 40 percent, according to a research report 'Luxury & Demonetisation-Bane or Boon' by Luxury Connect, a luxury brand management consultancy.

The country's luxury retailers however reckon that there will be a positive impact in a longer run on the sector.

The sector is currently estimated at $18.6 billion, and it has potential to touch USD 50 billion by 2020 and USD 180 billion by 2025, Amitabh Kant, CEO of Niti Aayog had told media earlier.

According to the survey conducted by Luxury Connect, 73 percent respondents said that the immediate impact on their sales has been negative while 41 percent of the business owners reported a sales dip ranging between 20-40 percent in the immediate aftermath of demonetisation.

41 percent of the respondents believe that the long term impact of demonetisation will be positive and will result in an overall growth of the luxury sector. 32 percent of the respondent hold a neutral view while the remaining 27 percent believes that there would be a negative impact in the long term as well.

"It was a general consensus that there there was no doubt that demonetisation is a great move for a better future of India and its economy. Respondents and people at large, truly believe that it will help in increasing the ﬂow of money, resulting in increased purchasing power in the very near future," the report said.

On a qualitave perception basis, respondents when asked to share their opinions on 'most to least impacted sectors', 51 percent said jewellery & watches was most impacted followed by real estate at 30 percent.

According to the survey, during the lull period, most of the brands adopted various strategies to counter the negative sentiment, ranging from seeking rent reduction from land lords to enhancing service standards to even oﬀering lower priced brand extensions and discounts.

Direct discounting seems to be the most popular method as adopted by 33% of the retailers, the survey said.

The survey further said there is widespread confusion, anticipation, fear for the unknown and uncertainty around the GST bill. Due to confusions, ambiguity and lack of clarity, 33 percent believe GST will help in the recovery of the luxury sector, 47 percent are unsure and 20% have no opinion on the matter.